Updates from briefing. 1) 2H13 container manufacturing business outlook; 2) finance lease arrangement of the vessels and future development plan; 3) offshore focus and development outlook; 4) natural gas price adjustment impact on Enric; 5) Qianhai development updates.
1H13 results lower than expectations, mainly due to 1) weak demand for container box, industry utilization remained 50% during the period, both revenue and gross margin declined; 2) road transportation vehicle revenue declined by 2.2% yoy; 3) booked sales revenue of offshore engineering was not able to cover the operating expenses; 4) finance costs rose by 92.4% yoy.
Revise down FY13-FY15 earnings estimates. Revise down FY13-FY15 revenue by 9.2%, 8.1% and 1.7% to RMB57,672 million, RMB66,699 million and RMB76,160 million, respectively. Revise down FY13-FY15 earnings estimates to RMB1,306 million, RMB1,501 million and RMB2,109 million, respectively.
Maintain ‘Buy’ with TP of HK$17.35. We think the weak container manufacturing demand may have seen its trough. Although the recovery of container manufacturing business may be slower than expected, we think the land valuation in Qianhai may be unlocked with the development progress, supporting the valuation of the Company. Share price may face downward pressure given the 1H13 results, but the long term investment value remains.